SEOUL, April 10 (Reuters) - South Korea and the UnitedStates remained on high alert for any North Korean missilelaunch on Thursday as the hermit kingdom turned its attention tocelebrating its ruling Kim dynasty and appeared to dial downrhetoric of impending war.

Despite North Korea's threats it will attack U.S. bases andthe South in response to any hostile acts against it, Pyongyangstarted to welcome a stream of visitors for Monday's birthdaycelebrations of its founding father Kim Il-sung.

North Korea has stationed as many as five medium-rangemissiles on its east coast, according to defence assessmentsmade by Washington and Seoul, possibly in readiness for a testlaunch that would demonstrate its ability to hit U.S. bases onGuam.

Officials in Seoul said there were no signs that additionalsteps had been taken on Thursday that would indicate the Northhad moved closer to a launch.

Pyongyang issued a statement that appeared to be tinged withregret over the closure of the joint Kaesong industrial zonethat was shuttered when it ordered its workers out this week,terming the North-South Korean venture "the pinnacle of GeneralKim Jong-il's limitless love for his people and brothers".

The statement on the country's KCNA news agency blamed SouthKorean President Park Geun-hye for bringing the money-spinningventure to "the brink of shutting down".

Kim Jong-il, Kim Il-sung's son, ruled North Korea until hisdeath in December 2011. He was succeeded by Kim Jong-un, thethird of his line to preside over one of the world's poorest andmost heavily militarised countries.

Since taking office, the 30-year old has staged two long-range rocket launches and a nuclear weapons test. The nucleartest in February triggered United Nations sanctions thatPyongyang has termed a hostile act and a precursor to invasion.

For over a month, Pyongyang has issued an almost dailyseries of threats to the United States and South Korea, mostrecently warning foreigners to leave the South due to animpending "thermonuclear" war.

Apart from the swipe at South Korea's new president, verbalthreats appeared to fall off as KCNA listed arrivals for theupcoming birthday celebrations, naming an eclectic mix rangingfrom Chinese businessmen to Cold War-era enthusiasts of itssocialist monarchy and official ideology of "Juche", orself-reliance.

Ramon Jimenez Lopez, listed as the chairman of the LatinAmerican Institute of the Juche Idea, and Jie Wenjiang, who itsaid was in charge of Hantong International freight company inDandong, China, were among the arrivals, KCNA said.

KEY TENET

Reinforcing the rule of the Kim dynasty and the legitimacyof the latest Kim to hold power in Pyongyang is a key tenet ofNorth Korea's ideology.

Party newspaper Rodong Sinmun said Kim Jong-un had "liftedthe North Korean people out of the sea of bloody tears that hasbeen their world in the past year" after the death of hisfather.

It was the first anniversary on Thursday of Kim's officialascent to power, although he became de-facto leader immediatelyafter his father's death.

Despite the heady rhetoric from North Korea and its closureof the Kaesong economic zone that generated $2 billion a year intrade, Pyongyang does not appear to have placed its 1.2 millionstrong armed forces on high alert.

Most observers say Pyongyang has no intention of igniting aconflict that could bring its own destruction but warn of therisks of miscalculation on the highly-militarised Koreanpeninsula.

The North's rhetoric has pushed the United States, theguarantor of South Korea's security, to move more militaryassets into the region in response to the rising threat levels.

In Washington, U.S. Defense Secretary Chuck Hagel warned onWednesday that the North was "skating very close to a dangerousline" with its threats and provocations, and warned the UnitedStates was prepared to respond to any moves by Pyongyang.

"We have every capacity to deal with any action that NorthKorea would take, to protect this country and the interests ofthis country and our allies," Hagel told reporters at thePentagon.

China, the North's only major diplomatic ally, has watchedthe situation evolving on its doorstep with concern.

"China respects North Korea, but it also holds theresponsibility of preserving peace in Northeast Asia," theGlobal Times, a tabloid published by the ruling CommunistParty's People's Daily, said in an editorial.

"Pyongyang should drop its illusions that it can make theworld stay silent over its desire for nuclear arms through itshard-line stance and deceptions. We believe the North still hasa chance and we regret that it has become mired in this crisis.We hope the crisis is only temporary."

Financial markets which have fluctuated with the rise intensions appeared to have stabilised and the head of SouthKorea's central bank on Thursday announced that there was noimminent threat to Asia's fourth-largest economy.

"We will take appropriate action if the economy is affectedby North Korea risks," Bank of Korea Governor Kim Choong-soosaid after it left interest rates unchanged on Thursday.